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Mongolia Fund to Manage $30 Billion Mining Jackpot

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Bloomberg reports, “The Mongolian government will set up a sovereign wealth fund using mining royalties and tax revenue, and distribute part of the income to citizens to alleviate poverty, said Finance Minister Sangajav Bayartsogt. The fund, to be run by professional managers from 2013, will disburse part of its annual income to every Mongolian in cash or non-cash securities to let them own stakes in the country’s mining wealth, Bayartsogt said. Initial capital will be drawn from Ivanhoe Mines Ltd.’s $4 billion Oyu Tolgoi copper- gold mine project, estimated to generate $30 billion in tax revenue over 50 years, he said.

‘We’re drafting the idea to implement the proposal, and we’re studying examples like the Alaskan Permanent Fund,’ Bayartsogt said in a Sept. 9 interview in the capital Ulaanbaatar, declining to specify the size of the proposed fund.

Mongolia, whose 2.7 million citizens depend on mining and agriculture for half the nation’s 2008 economic output, is banking on Oyu Tolgoi and about 6,000 other mineral deposit sites to lift average annual income, which at $1,680 per person last year was ranked 151st in the world by the World Bank.

‘If the government can pull this off, we can expect lasting stability and growth in Mongolia, because this fund can help stabilize the economy and help fend off the boom and burst of the commodity-price cycles,’ said Erdenedalai Choinkhor, an analyst at Frontier Securities Co. in Ulaanbaatar. The $40 billion Alaska Permanent Fund, created in 1976 with state revenue from oil production, has constitutionally protected capital that can’t be spent. Most of its earnings are reinvested, and a dividend is returned each year to eligible Alaskans. The fund reported a $6.3 million loss in 2001 after buying 685,600 shares in Enron Corp. Norway’s sovereign wealth fund, the 2.47 trillion-krone ($410 billion) Government Pension Fund – Global, derives money from taxes on oil and gas and ownership of petroleum fields. The oil and gas money is invested abroad to avoid stoking domestic inflation.

Mongolia also wants to diversify the economy’s reliance on animal husbandry and mining to avoid the so-called Dutch Disease, where a commodity boom sucks in foreign exchange, raises the currency’s value and makes manufacturing less competitive.”

read more: Bloomberg

White House Nominates Heath Tarbert for CFTC Chairman

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The White House announced Heath P. Tarbert will be nominated to serve as Commissioner and Chairman of the Commodity Futures Trading Commission (CFTC). Tarbert currently serves as Assistant Secretary for International Markets at the U.S. Treasury Department. Before joining the U.S. Treasury, Tarbert was a Partner at law firm Allen & Overy. Tarbert was confirmed by the U.S. Senate for his current Treasury post at 87 (yes) to 8 (no).

Upon Senate confirmation, Tarbert’s CFTC term would start on April 14, 2019 and last for five years. Tarbert is taking over from J. Christopher Giancarlo whose term ends in April 2019. Tarbert will need a U.S. Senate confirmation to take the head CFTC post.

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KIA Could Sell Stake in North Sea Energy Business

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The Kuwait Investment Authority (KIA), through its unit Wren House Investment Management, is nearing a deal to sell a 40% stake in its North Sea energy business to JPMorgan Asset Management. In July 2018, KIA closed on a deal to acquire oil and gas pipeline firm North Sea Midstream Partners from ArcLight Capital.

More details to follow –

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Pensioenfonds PGB Hires BMO Global for Equity Protection Strategy

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Pensioenfonds PGB is a Dutch multi-sector pension fund. PGB awarded a mandate to implement a protection strategy for its €12 billion equity portfolio to BMO Global Asset Management. PGB is a €26.5 billion fund. PGB has been using BMO Global’s responsible engagement overlay since 2017.

The Chief Investment Officer of PGB is Harold Clijsen.

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